There are more economists who believe that with Brent above $120 and WTI above $100 that the spill over to gas prices will push the cost of a gallon of regular above $4. That would leave middle class households which use their cars heavily in real trouble, as their cost of gas rises several hundreds dollars this year.
Now there is speculation that the effect of the payroll tax cuts, likely to be extended will not offset the cost of gas.
Pierpoint Securities chief economist Stephen Stanley said “Typically, what they do is they take the money and pocket it. They pay down debt. In 2011, you had two things that were mirror images of each other. On the positive side, you had the tax holiday and on the negative side, you had rising gas prices which were the inverse of that.”
If gas does reach $4 this summer , Q3 GDP improvement could be badly hurt
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